July 23 (Bloomberg) -- As iPhone fans await the release of
a new model, they are delaying purchases and may cause Apple
Inc., the world’s largest company by market value, to post its
slowest sales and profit growth in more than two years.

With a redesigned model probably arriving by October,
analysts estimate that sales of iPhones -- Apple’s biggest
source of revenue -- slid in the fiscal third quarter from prior
periods. While analysts predict that the next iPhone will be the
best-selling smartphone yet from Cupertino, California-based
Apple, the purchasing delays will probably weigh down results
until the device hits stores.

“People are waiting,” said Andy Hargreaves, an analyst at
Pacific Crest Securities in Portland, Oregon. Apple will sell
about 25.4 million iPhones, he estimates, compared with 35.1
million in the previous quarter. “It’s going to be bad now, but
great later.”

A similar slowdown occurred ahead of last year’s iPhone 4S
release in October, causing Apple’s shares to slide when the
company reported profit that fell short of analysts’ estimates
for the first time since 2003. The stock slipped 0.1 percent to
$603.83 at the close in New York.

Apple hasn’t said when it will unveil a new iPhone, and has
given no details about plans for the product. Yet the dip in
unit sales underscores how speculation about Apple’s plans,
including a slew of websites dedicated to publishing rumors
about new devices, can lead potential buyers to sit on their
wallets while waiting for a new product.

‘Tech-Savvy’

“Customers are increasingly tech-savvy and they want to
have the latest and greatest,” said Anthony Scarsella, the
chief gadget officer at Gazelle.com, a website that buys and
sells used iPhones and other consumer electronics. He said
people wind down trading in their iPhones about four to six
months ahead of an iPhone release. “It’s something we
definitely see year after year.”

Tomorrow, Apple will probably report profit grew 35 percent
to $9.86 billion, according to the average of analysts’
estimates compiled by Bloomberg. Sales are projected to rise 31
percent to $37.3 billion. While that kind of growth would
outpace gains by most of Apple’s technology peers, it would be
the company’s slowest since 2009.

Apple is preparing to overhaul the look of the iPhone and
has placed orders with suppliers for screens that are bigger
than phone’s current 3.5-inch screen, people with knowledge of
the matter said in May.

Jim Ferrer, a commercial insurance broker in San Francisco,
is among those waiting for the next iPhone. He bought the first
model -- known just as the iPhone -- when it was released in
2007 and has held on to it ever since.

‘Many Changes’

Ferrer considered getting the iPhone 4S, and then decided
to delay the purchase when he saw that the newest model may be
lighter and have a stronger processor that will make
applications run faster.

“There are so many changes that keep coming out that I
want to make sure I get the right one,” he said. “Then I’ll
stick with it.” Ferrer browses the Internet several times a
week to check out the latest rumors about the next iPhone.

Another potential barrier to near-term sales is a weak
global economy that’s crimping consumer spending, as well as
changes by carriers including Verizon Wireless that extend how
long a customer must wait to get a subsidy for a new device,
said Pacific Crest’s Hargreaves.

Apple also is facing competition from rivals including
Samsung Electronics Co., which according to NPD Group is the
world’s biggest seller of smartphones. Samsung released the
Galaxy S III phone in May.

Shares Gain

Still, Wall Street analysts have a history of
underestimating Apple’s results. The company’s earnings have
exceeded average estimates every quarter except one since at
least 2003, according to data compiled by Bloomberg.

Investors are shrugging off concerns about Apple’s
quarterly results and are instead looking ahead to the next
iPhone, according to Gene Munster, an analyst at Piper Jaffray
Cos. So far this year, Apple’s shares have risen 49 percent.
After conducting a customer survey, Munster says more than 80
million iPhones will be sold when the new model is released.

Munster said iPhone sales may be better than many analysts
are projecting in the fiscal third quarter, in part because of
demand in China, where the device went on sale in January and is
now Apple’s second-largest market behind the U.S.

After Verizon Wireless said last week that it activated 2.7
million iPhones in the period, Morgan Stanley analyst Katy
Huberty said Apple’s unit sales of the smartphone may top 31
million.

Twitter Mentions

Even so, anticipation for the next model probably curbed
second-quarter results to some degree, Munster said. The term
“iPhone 5” is mentioned on Twitter Inc.’s website about every
11 seconds, he said.

“It’s already having some impact,” Munster said.

Delayed iPhone purchases will have their biggest effect on
Apple’s financial results during the current quarter, which ends
in September. Toni Sacconaghi, an analyst at Sanford C.
Bernstein & Co., said last week that Apple is likely to provide
an “unusually conservative” outlook for the period.

Besides sporting a larger screen, the new iPhone will
probably have a thinner body and a more powerful processor,
according to Munster and other analysts. They also say it will
work with the faster so-called long-term evolution wireless
networks being rolled out by carriers such as Verizon
Communications Inc. and AT&T Inc.

IPad Cushion

Any third-quarter drop in iPhone sales also may be
partially balanced out by iPad purchases, according to Horace
Dediu, a former analyst at phone-maker Nokia Oyj who now
publishes industry research at Asymco.com.

In addition to individual customers, schools and companies
are buying the leading tablet computer, he said.

“There will be a significant story there,” he said.

Apple’s earnings reports have consequences for the broader
market. The company, which also makes the iPod music player and
Mac computers, accounts for more than 12 percent of the
valuation of the Nasdaq Composite Index, meaning fluctuations in
its stock price can influence pension funds, mutual funds and
other investments tied to the benchmark index.

Anticipation for the next iPhone is global. Alok Jain, 34,
a software developer in Bangalore, India, said he’s waiting for
the next model and has encouraged several friends to hold off as
well.

“There have been a couple of instances in the past few
months when friends came up to me and said, ‘This 4S looks
appealing,’” Jain said. “And my advice was, ‘Wait until the
iPhone 5.’”